Main navigation expanded

You are here:

Profits v. Principles

Sarah C. Haan is an Associate Professor of Law at Washington and Lee School of Law. She wishes to disclose that she owns a small amount of Facebook stock.

In her cogent and insightful essay, Kate Klonick describes how Facebook wears three hats: regulator, adjudicator, and publisher. In these three roles, she explains, Facebook relies on “public figure” and “newsworthiness” concepts that are similar to those developed by U.S. courts, and it endorses some of the judicial reasoning behind them. Yet Facebook’s “public figure” and “newsworthiness” concepts are not identical to those concepts as they appear in First Amendment doctrine, and Facebook’s use of them continues to drift.

Klonick’s work is part of a broader project in which scholars assess the speech regulation of Facebook and other social media companies against principles of First Amendment law. The project is particularly worthwhile, I think, when it excavates the values that are truly at the heart of the private ordering these companies do. In this short response, I will offer a few modest observations about the influence of Facebook’s business model and global ambitions on its regulation of speech.

Facebook’s Business Model

I was struck by the part of Klonick’s essay in which she describes how Facebook’s former global policy manager, Jud Hoffman, denied that Facebook borrowed its regulatory approach from First Amendment public figure doctrine. Instead, Hoffman told Klonick that Facebook derived its regulatory approach primarily from its corporate mission, which, in Klonick’s words, “had to be balanced against competing interests,” namely “users’ safety and the company’s bottom line.”

And there it is—a clear acknowledgement that Facebook’s decisions about how to regulate speech are being shaped by its profit motive. This is not surprising. In fact, it would be astonishing if a leading public company was regulating its customer platform without attending to the influence of such regulation on its business and its market valuation.

Mark Zuckerberg, Facebook’s CEO, has defended Holocaust deniers as unintentionally mistaken, and in the name of free speech Facebook treats Holocaust denial as an idea worthy of distribution on its platform.1 These choices, too, may be driven by the company’s business interests. In its published “News Feed Values,” Facebook explains that it won’t discriminate among ideas because its “aim is to deliver the types of stories we’ve gotten feedback that an individual person most wants to see. We do this not only because we believe it’s the right thing but also because it’s good for our business.”2 What the company means is that it is firmly committed to a customization model, in which it delivers value to users by providing them with the information they demand. If customization is critical to the business model, and customization means delivering content that users want, how can the company criticize its users’ content choices? Instead, Facebook prefers to defend those choices and, ultimately, satisfy them.

Tensions exist between Facebook’s business interests and its aspiration to create a prosocial expressive environment, and we are about to learn how the company resolves such tensions when it is under market pressure. After Facebook’s fourth quarter in 2017, the company began telling investors that its efforts to revamp its News Feed were reducing engagement.3 The company subsequently experienced the single biggest one-day decline in market value—of any company, ever, in American history—in the summer of 2018, after it issued second-quarter results showing that its revenue growth has slowed.4 To be clear, Facebook’s worldwide revenue is still growing, but its revenue growth rate has fallen off. So demanding is the market in which Facebook operates that slight growth deceleration over two consecutive quarters caused its stock price to plummet.

Since the 2016 election, the company has hired thousands of new employees as it has ramped up its speech-regulating regime and has said that it anticipates its expense growth will exceed its revenue growth in 2019.5 As the bills for these speech-regulating choices come due, we’ll see how committed the company is not only to those particular choices but also to transparency about them.

Facebook’s Global Ambitions

Facebook is a global company, and both its user base and its user growth are now largely abroad. Of the company’s 1.47 billion daily active users, roughly 87% are outside the United States and Canada and therefore likely unfamiliar with American free speech norms.6 Although a high proportion of Facebook’s worldwide revenue comes from these two countries—over 45% in the second quarter of 20187—the fact remains that the vast majority of the people whose speech Facebook regulates live outside the United States. Facebook risks alienating most of its users by adopting American First Amendment law or American free speech values. Accordingly, Facebook has a business reason to develop speech rules that incorporate speech values from the international community and from important markets for the company’s advertising.

This is, in fact, what the company is doing. In August, an executive in Facebook’s public policy unit for Europe, the Middle East, and Africa wrote that Facebook has looked to the International Covenant on Civil and Political Rights (ICCPR) “for guidance” about when it’s appropriate to place restrictions on free expression.8 The essay suggests that the main legal influence on Facebook’s current approach to this question is not U.S. free speech doctrine—which is not mentioned at all—but international human rights law.9 The essay goes on to offer the company’s interpretation of the ICCPR’s take on free expression, contending that this international covenant backs up Facebook’s emerging principle that speech should be restricted when “necessary to prevent harm.”10 Given Facebook’s global ambitions, we should expect the company to continue incorporating international law concepts into its speech rules, and to try to “sell” these concepts to an American audience.

We are at the beginning of a paradigm shift in which private companies are becoming, as Klonick memorably puts it, the New Governors of the public square. One thing this means for speech regulation is that corporate interests and accountability mechanisms will help shape the rules. Klonick’s essay describes how Facebook has recently applied the “public figure” concept to users with thousands of followers, while also softening the rules so that it can offer this category of users a bit more protection against direct verbal attack. The company’s approach allows it to continue to harness certain users’ popular appeal to build engagement, while reducing these users’ vulnerability to disparaging speech. It may not be clear where the concern for principle ends and the concern for profits begins, but the line is there somewhere for scholars to find.

3 Transcript of Facebook Fourth Quarter and Full Year 2017 Results Conference Call at 2 (Jan. 31, 2018) (remarks of Mark Zuckerberg), https://s21.q4cdn.com/399680738/files/doc_financials/2017/Q4/Q4-17-Earnings-call-transcript.pdf; see also Jacob Kastrenakes, Facebook Usage Falls in the US as It Begins to Tinker with the News Feed, Verge (Jan. 31, 2018), https://www.theverge.com/2018/1/31/16956818/facebook-q4-2017-earnings-50-million-hours-reduced-usage.